Why You Should Invest in Stocks

Stocks Poised for Growth

Stocks are poised for growth.

Really? How do you know and when is this going to happen?

The truth is no one knows with certainty when the market is going to move up or down.

We can be guided by what has happened in the past and what logic tells us about today’s markets.

Historically, stocks have rebounded following a recession or a bear market. The rebound may have been swift or slow, but it has always happened.

The nature of the stock market is that it will rise until investors no longer feel confident of further increases. Then it will fall as investors sell to lock in profits or try to cut losses. Both of these actions drive prices down further.

At some point, investors will regain confidence that stocks are a bargain and return to the market to buy. As more investors move into the market, prices continue to rise and that attracts more investors.

Prices will reach a level that once again becomes uncomfortable and the cycle resumes.

Most investors know that the stock market does not move up or down in a straight line. It will move up then retreat and then resume its rise. The same is true on the way down.

Prices move in a zigzag fashion and it is sometimes difficult to tell when a trend will continue for the long term.

The notion that stocks are poised for a growth is also grounded in a belief that the U.S. economy is resilient and can weather even very difficult circumstances.

The real question that remains unanswerable is when the market will move in one direction for a sustained period of time.

That’s why long-term investors must be willing to ride out the down markets as well as the up markets.

As we deal with the changes of a very difficult economic period, investors should be aware that out of change comes opportunity.

Some of the companies that were industry and market leaders of the past will not adapt well or as quickly as others.

These are the circumstances when investors can achieve impressive gains by picking the new winners.

Follow the money, especially as federal dollars flow into new industries, such as green energy, and reforms in established industries (health care and financial services).